Tech Tenants Filling a Slice of Brooklyn Called Dumbo Heights

A view from part of the Watchtower complex vacated by Jehovah’s Witnesses.

Andrew Renneisen / The New York Times

By MATT A.V. CHABAN

August 26, 2014

Among the leading gospels coming out of Brooklyn over the last century has been that of Jehovah’s Witnesses.

Members carried forth their message on street corners and at subway stops, handing out pamphlets printed at their headquarters, known as the Watchtower, a complex of beige-brick factories at the base of the Brooklyn Bridge.

But during the last decade, a new Brooklyn gospel arose, one of techies, artisans and entrepreneurs. It turns out the Watchtower makes a pretty nice cathedral for them, too.

With a move of their headquarters to Warwick, N.Y., the Witnesses have been selling their city holdings — more than 30 buildings over the last 10 years, largely to residential developers. Among the properties were immaculately maintained townhouses and the Bossert Hotel, where the Dodgers used to stay, and the huge old warehouse at the foot of Atlantic Avenue that now houses the One Brooklyn Bridge Park condominiums.

The most obvious use for the six brick behemoths, also known as Brooklyn Bethel and clustered around Pearl and Sands Streets, would have been loft apartments; Dumbo has quickly become one of the most expensive residential neighborhoods in the borough. But the Bloomberg administration was desperate to keep the spaces commercially zoned, to provide homes for the city’s growing tech sector.

So last fall, Jared Kushner, owner of 666 Fifth Avenue and the Puck Building and scion of a New Jersey development dynasty, and Aby Rosen, custodian of the Seagram Building, Lever House and 17 State Street, teamed up with Asher Abehsera, a longtime Dumbo developer, and Invesco, the Atlanta institutional investor. Together they bought the 1.4 million-square-foot complex for $375 million.

At the time, the price seemed extreme, but with borough-grown talent bursting from their lofts in Dumbo and Williamsburg and with prices soaring across the river in SoHo, the Flatiron district and Chelsea, the huge, state-of-the-art offerings in the old Watchtower buildings have begun attracting some of the top young companies in the city.

“We really want to create a product you won’t find anywhere else in Brooklyn, or most of the city for that matter,” Mr. Kushner said during a recent tour of what has been nicknamed Dumbo Heights. “This is really Class-A space — the dark fiber, the new elevators, the restaurants and roof decks — inside the classic industrial spaces these firms love.”

The team behind Dumbo Heights has the luxury of rebuilding the entire space from top-to-bottom, inside-out without any existing tenants to get in the way — which was not the case for many of the old loft buildings that became hubs for the likes of Google and Tumblr. And the partnership has a bit of an advantage over traditional developers in knowing what tech companies want. Mr. Kushner works with his brother Josh’s Thrive Capital, one of the city’s top venture capital shops. The result is grander spaces for maturing businesses looking to take big blocks of space.

Hence the name, meant to evoke the gritty lofts of Dumbo and the lofty grandeur of Brooklyn Heights.

Little has outwardly changed in the five industrial buildings, built between 1909 and 1967 and ranging between nine and 12 stories. The interiors are largely raw, with plenty of room for media walls, sculptures and amorphous furniture, though just below the surface will be the latest fiber optics and wireless technology. A mix of pieces by Brooklyn and international artists from Mr. Rosen’s collection will also fill the spaces.

Outside, the green-framed windows and castellated roof of the Watchtower remain, to be converted into decks and bars, but all the familiar signage was taken by the Witnesses. (A second complex of two warehouses on the other side of the bridge with the famous clock greeting those entering the borough over the Brooklyn Bridge has yet to be sold, though a deal is said to be in the works.) The Dumbo Heights team is building on the success of Two Trees Management, the father-son partnership of David and Jed Walentas, who are responsible for almost single-handedly transforming Dumbo into what it is today, from twee retailing to eight-figure penthouses.

The huge, state-of-the-art offerings in the old Watchtower buildings have begun attracting some of the top young companies in the city.

Andrew Renneisen / The New York Times

“Two Trees has really mastered the 500- to 2,500-square-foot office suite for start-ups, but these companies need somewhere they can grow without having to leave the borough,” said Natalie Hurwitz, a broker at Sholom & Zuckerbrot and a former city planner. “People live in Brooklyn, they want to work in Brooklyn, but businesses are almost totally out of room. Dumbo Heights is just what the borough needs.”

As if to prove the point, Etsy, the darling of Dumbo, left its old cobbled-together offices, some 80,000-square-feet inside 55 Washington Street, to move up the hill. Announced in May, the deal was the first lease for Dumbo Heights, and a big one at that: 200,000 square feet for the entire building at 117 Sands Street and part of 55 Prospect Street, connected through one of the complex’s signature sky bridges.

“We’ll remain firmly planted in Brooklyn, where so many independent, creative businesses are flourishing,” Chad Dickerson, the company’s chief executive, wrote on the company’s blog. “We’ll continue to influence and be influenced by the mix of industries here.”

The state gave the company a $5 million tax credit to stay in the borough, which some criticized since Mr. Dickerson had said he couldn’t fathom relocating anywhere else.

The development itself, however, is borough-agnostic.

This month, WeWork, the Manhattan co-working company that leases out offices as small as a single desk up to thousands of square feet, reached a deal to open its first Brooklyn outpost in the refurbished complex. WeWork took the entire 90,000 square feet of office space inside 81 Prospect Street, its 11th branch. Given that the developers are focused on larger tenants, WeWork will offer much of the incubator space for Dumbo Heights, as well as networking services and facilities management tools like an app to check in visitors.

That leaves only three commercial buildings, with some 600,000 square feet, up for grabs. Leases so far are in the mid-$50 a foot, but upper floors in remaining spaces are asking as much as the mid-$60 range per foot. For companies considering relocation, it is almost twice the going rate as other parts of Brooklyn and competitive with Lower Manhattan though also less than Chelsea and SoHo.

At left, Jared Kushner with Asher Abehsera, right, along with a third party, teamed up to buy the 1.4 million-square-foot complex for $375 million.

Andrew Renneisen / The New York Times

Besides the sky bridges, what binds the complex together is the 90,000 square feet of ground-floor retailing. Much as he did while working at Two Trees in the last decade, Mr. Abehsera is responsible for attracting the kind of restaurants and shops that have become synonymous with Kings County. Expect gluten-free bakers, Edison-bulb-lighted bistros, maybe a beer hall and of course sushi, all run by some classically trained, tattoo-covered chefs.

The retail landscape is especially important since Dumbo Heights may be on the border of two great neighborhoods but is also somewhat removed from them, surrounded as it is by the access ramps for the bridges. Still, it offers unparalleled views of Manhattan and sits at the heart of the newly created Brooklyn Tech Triangle, which stretches from Dumbo to the Metrotech Center in Downtown Brooklyn and the Brooklyn Navy Yard.

“People think it’s a black hole there, because they never had any reason to go there unless you were a Witness,” said Tom Montvel-Cohen, chairman of the Dumbo Business Improvement District. “But soon they’ll realize it’s actually in the heart of everything.”

Still, there is a good chance part of the complex will become residential at some point to help underwrite the purchase. An obvious candidate is a 30-story hotel built in 1992 at 90 Sands Street where many of the Witnesses have stayed. The developers do not gain control of the 400,000-square-foot building until 2017 anyway.

“If five out of six buildings, or even four out of six buildings remain commercial, that’s still a huge win for Brooklyn’s businesses,” said Chris Havens, head of commercial leasing at Aptsandlofts.com. Plus, a mix of office and apartment residents seems to be the key to a vibrant 24-7 neighborhood.

And with the de Blasio administration desperate to create affordable housing, it would probably be willing to cut a deal to allow some of the commercial space to be rezoned for apartments.

“We’ll let everything evolve around it and then save the best piece for last,” Mr. Rosen said.